The dollar traded 0.3 percent from a 10-month high against the yen as evidence of a U.S. economic recovery tempered speculation that the Federal Reserve will signal additional easing at a policy meeting today.
Demand for the yen was limited amid expectations the Bank of Japan (8301) will keep interest rates and the size of its asset- purchase fund unchanged at a two-day meeting that ends today. The euro remained higher against the dollar after European Union Economic and Monetary Affairs Commissioner Olli Rehn said he was confident that European Union leaders would reach an agreement on increasing the size of its crisis fighting funds this month.
“Recent U.S. data may be strong enough to persuade policy makers to be less cautious about the pace of the recovery,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides currency margin-trading services. “The market is reducing bets for another round of quantitative easing, pushing the dollar higher.”
The dollar rose 0.2 percent to 82.37 yen at 8:48 a.m. in Tokyo from the close yesterday, after touching 82.65 on March 9, the highest since April 27. The currency was little changed at $1.3170. The yen slid 0.3 percent to 108.48 per euro.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, reached 80.132 yesterday, the most since Jan. 25. The index fell 0.4 percent on Jan. 25, when the Fed said subdued inflation and slack in the economy are likely to warrant keeping rates “exceptionally low” at least through late 2014.
U.S. Data
Retail sales in the U.S. increased 1.1 percent in February, the most in five months, according to the median estimate of economists in a Bloomberg News survey before Commerce Department figures due today. That would follow data on March 9 that showed nonfarm payrolls increased by 227,000 in February after rising by a revised 284,000 the prior month. The unemployment rate held at a three-year low of 8.3 percent.
In Japan, 12 of 14 economists surveyed by Bloomberg expect the BOJ to leave its asset-purchase program unchanged and keep the benchmark interest rate at a range of zero to 0.1 percent. The bank unexpectedly boosted bond buying by 10 trillion yen ($121 billion) Feb. 14. The yen has weakened 5.8 percent against the dollar since the day before the decision.
The EU’s Rehn said yesterday that the European Commission was ready to prepare a proposal on strengthening the so-called firewall against the debt crisis. While leaders had made “quite good progress” in taming the situation, the need remained for the EU to complete its crisis response plans, Rehn said in Brussels after a meeting of euro-region finance ministers.

Source: Bloomberg